GST department arrests key suspect in alleged ₹8,000 crore tax fraud involving 246 shell companies

The Goods and Services Tax (GST) department has arrested a key suspect linked to an alleged ₹8,000 crore tax fraud involving extensive use of fake documents. The suspect was apprehended at a lodge in Mira Road, Maharashtra, after a thorough investigation that highlighted a sophisticated scheme to evade tax obligations. Authorities seized crucial evidence, including 21 mobile phones, two laptops, 11 SIM cards, multiple debit cards, checkbooks, and rubber stamps associated with various fictitious companies, all of which could provide critical insights into the operation.

The investigation was initiated by Rishi Prakash, a GST officer in Pune, who identified irregularities during an online examination of the transactions linked to a company named Pathan Enterprises. The scrutiny revealed that Pathan Enterprises had no legitimate business activities, as there were no records of actual purchases or sales. Instead, the account activity consisted solely of financial transactions that lacked supporting documentation. Further investigation uncovered that the address provided for GST registration was fake, leading authorities to discover that the registered owner, Pathan Shabbir Khan Anwar Khan, was a rickshaw driver in Bhavnagar, Gujarat, who had no association with the company.

As the investigation deepened, it was uncovered that the operation involved the establishment of 246 shell companies. These companies were created under various fictitious names and identities, facilitating a structured approach to committing tax fraud. Investigators found that the accused and their associates employed these fake companies to issue fraudulent invoices and manipulate GST returns, allowing them to claim input tax credits that they were not entitled to. This elaborate scheme involved numerous individuals, including Nitin Barge, Faisal Mewawala, and others, who played significant roles in orchestrating these fraudulent activities.

The fraudulent activities reportedly spanned from September 2018 to March 2024, during which the accused allegedly managed to evade tax payments amounting to ₹5,000 to ₹8,000 crores. The scale of the operation raised concerns about the vulnerabilities within the GST framework, which were exploited by the suspects to conduct their illicit activities. The investigation revealed systematic weaknesses in the verification processes for GST registrations and compliance, prompting the GST department to consider reforms and stricter oversight measures to prevent future fraud.

Following the arrest, the suspect was presented in the Shivajinagar court in Pune, where he was remanded to 14 days of judicial custody. The GST department, in collaboration with local law enforcement agencies, is actively pursuing the remaining individuals involved in the conspiracy.